One whiff and the dollar is well away. A whiff of trade wars, that is.

Unfortunately, the smell has come when the dollar was already starting to swoon for other reasons, including signs of improvement in global risk sentiment as well as a renewed investor confidence in the prospects for the euro.

But, trade wars first.

As the global economy continues to bump along the bottom, with even strong growth in China slowing down, the international trade community is becoming increasingly sensitive to the use of undervalued currencies as a tool for boosting exports.

Although the bill is unlikely to pass Congress in its present form, Beijing was quick to warn that tariffs would start a trade war that would push the global economy into a depression like that seen in the 1930′s. The dollar, which has spent the last few weeks benefiting from a general decline in global risk sentiment, found its safe haven status compromised as any talk of trade wars could well see the U.S. economy suffering more than most.

But, the U.S. currency was already finding that investors were losing interest before then.